Accounting for startups

It all starts with an outstanding idea and/or a unique selling point that promises big profits. After the foundation of the Startups the focus is then on acquiring customers and refining the business model and generating revenue. Ultimately, however, it is the finances that underpin all these activities and ultimately determine success or failure.
Keeping these under control as a founder requires organised accounting for start-ups. In fact, there is much more to it than just carrying out the correct debit and credit balances. credit posting.

Accounting for startups is especially important because in order to keep accurate financial records, you need to implement an accounting system that allows you to organise your financial transactions because and as this part of your business becomes more complex.

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Why is accounting important for the startup?

Accounting is an essential part of any business, even in the start-up phase. Once the idea is off the ground, the structure of the business has been determined and the basic logistics are established, you need to think about accounting. As the success of a start-up ultimately depends on money, the way in which the young company manages its finances will play a key role in its viability.

Whilst it may seem that initially the expenses are not complex enough to require such formal management, early adoption can bring significant benefits to the business in the long run. Some of the benefits of setting up bookkeeping in the start-up phase of your business are:

Optimal financial organisation
Retrievable presentation of the financial situation without outside help
Increased efficiency in all processes associated with financial transactions
Higher probability of obtaining financing from investors
Recognising financial risks or weaknesses at an early stage
Better prospects for financial stability
Detailed records of financial history to learn lessons for the future
Keeping track of debts
Enable comparisons of the company with the competition

The risks for start-ups without proper accounting

Failure to implement accounting processes from the outset can have costly consequences. The risks of neglecting accounting include

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Difficult forecasts
Lack of responsiveness to crises and opportunities
Uncertainty about the company's financial situation leads to wrong decisions
Inability to provide investors with detailed financial data
Limited financial history to refer to
Possible problems with tax authorities

For these and other reasons, it is recommended that startups make bookkeeping a priority from the beginning. This doesn't mean that bookkeeping has to be a big, intimidating process. The sooner you start, the sooner accounting has a chance to grow with the company.

Bookkeeping vs. accounting for startups

Despite the common misconception, bookkeeping and accounting are not the same thing. However, they are both crucial to the financial health of your business.

Bookkeeping: Daily tracking of company finances and maintenance of records. An accountant's duties may include collecting and recording invoices from customers, paying your suppliers, reconciling bank accounts and much more.

Bookkeeping, on the other hand, is the organised recording of all business transactions on the basis of supporting documents. It thus reflects the status of a company in figures and is therefore one of the most important sources of information.

Controlling for start-ups

Accounting for start-ups is the basis for the controlling. This determines the causes of deviations from the plan and sets out measures for optimisation. A company must constantly monitor and compare its data and initiate changes. The best tool for this is bookkeeping: this is where all of the company's figures can be found. Reporting on costs and income can be created on the basis of individual postings by bringing them into a cost type and cost centre structure.

Accounting software for start-ups

Of course, there is a wide range of software available for startup accounting. These can be simple solutions from the cloud or professional programmes from well-known providers.
However, the best chance of achieving end-to-end automation with the highest information density at the same time is with the introduction of a ERP software given.

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